CEO Roger Ferguson Reports Lower CREF Expense Ratios
December 18, 2009
Dear TIAA-CREF Participant:
Over the past 18 months, we have been working diligently to reduce expenses on your behalf. As a result of these efforts, market appreciation, and the unique, at-cost structure of the College Retirement Equities Fund (CREF), these savings are passed along to you in the form of lower expenses. We currently anticipate that expenses for the CREF Accounts for the 12-month period ending April 30, 2010 will be 9% to 21% lower than initially estimated last May. Fees for the CREF Stock Account, the largest CREF Account, reflect a decrease of 17%. Other reductions are shown in the table below.
Estimated Annual Expenses for the CREF Accounts | |||
|---|---|---|---|
| CREF Account | Estimated Annual Expenses as of 05/01/09 Prospectus | Revised Estimated Annual Expenses | % Change |
| Stock | 0.585% | 0.485% | -17% |
| Global Equities | 0.645% | 0.510% | -21% |
| Growth | 0.575% | 0.465% | -19% |
| Equity Index | 0.485% | 0.420% | -13% |
| Bond Market | 0.500% | 0.455% | -9% |
| Inflation-Linked Bond | 0.495% | 0.450% | -9% |
| Social Choice | 0.530% | 0.440% | -17% |
| Money Market | 0.465% | 0.415% | -11% |
Our goal is to be smart stewards of the money you entrust to us. That is why we are committed to strong performance and long-term growth, why we hire experienced portfolio managers who understand the demands of retirement-focused investing, why we take such a vigorous approach to risk management, and why fees on TIAA-CREF funds and variable annuity accounts are generally half the industry average.1
We think that more of your money should stay in your portfolio, working for you.
In an individual portfolio, reducing fees by even a few basis points helps boost overall performance and has the potential to translate into additional retirement savings. To give you a sense of what this might mean, let me share an example: $100,000 invested in a hypothetical portfolio earning 6% with an expense ratio of 0.580% would total $487,181 after 30 years. That same portfolio invested at an expense ratio of 0.450% would total $505,530 after 30 years – a difference of more than $18,000.2
While we cannot guarantee future performance or expense levels, which are determined in part by market movements, we will continue to manage costs aggressively across the economic cycle to deliver long-term value to you. As we announced last week, those of you who are annuitants with TIAA Traditional lifetime income will receive at least as much total income in 2010 as you received in 2009, reflecting our commitment to help participants to and through retirement. Today's news that we have achieved such significant expense reductions despite an uncertain economic environment underscores that commitment.
Thanks for being part of TIAA-CREF.
Sincerely,
Roger W. Ferguson, Jr.
President and Chief Executive Officer
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www.tiaa-cref.org for details.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877 518-9161 or visit www.tiaa-cref.org/prospectuses for a current prospectus that contains this and other information. Please read the prospectus carefully before investing.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF), New York, NY.
1 Morningstar Direct (December 2009) based on expense comparisons by category.
2 This is a hypothetical illustration. These returns are for illustrative purposes only and do not reflect actual (product) performance and are not intended to predict or project investment results.
